The 10-Year Bear Case for Apple

If history is any indication, the next 10 years could be difficult for Apple Inc. (AAPL) and its shareholders.

AAPL Stock Is Too Popular for Its Own Good

Only a handful of companies in history have run into the problem of being too successful. But the reality for AAPL is that market saturation and over-ownership are two of the largest problems facing the company in the next 10 years.

At a forward price-to-earnings ratio of only 10.5, AAPL stock may seem like a great deal for value investors. Unfortunately, the big question for Apple is not about income, it’s about growth.

Apple Inc. does a lot of things well, from iTunes to Apple Music to iPads. But let’s not kid ourselves: roughly two-thirds of AAPL’s revenue comes from the iPhone. The iPhone is arguably the single most successful product in history.

The problem? Everyone already has an iPhone.

In the first quarter of this year, AAPL reported staggering profits of $13.6 billion. That number dwarfs the $1.5 billion in profits reported by Facebook Inc (FB) and the $513 million in profits reported by Amazon.com (AMZN) in the same quarter.

And yet, while AMZN stock is up 64% in the past year and FB stock is up 30.6%, AAPL stock is down 24.6%.

An Apple Inc. History Lesson

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